TikTok is increasingly becoming a popular social media platform. Businesses choose this platform to promote their products, brands, and reach target customers. With so much competition, making your ad stand out from competitors and achieving the best results is quite challenging. At this point, a suitable TikTok ad bidding strategy will be effective. By this below article, Optimal Agency will share with you the most effective way to set up TikTok ad bids.
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What is TikTok ad bidding?
Bidding is the amount that an advertiser is willing to pay for displaying ads on TikTok. Advertisers can bid on ad space to reach specific audiences on the platform. The higher the bid, the greater the likelihood that the ad will be displayed to the target audience.
TikTok ad bidding operates on an auction system where advertisers compete for the same ad space, and the highest bidder wins. Advertisers can set a daily or lifetime budget and bid based on metrics such as clicks, conversions, impressions,… TikTok’s algorithm considers the bid, relevance, and quality to determine which ads to display to users.
Why is TikTok ad bidding important?
Based on your TikTok ad bidding strategy, you can control the cost per conversion. If you bid higher than your competitors, you have a better chance of displaying in prime ad spaces.
Conversely, if your bid per interaction is low, your TikTok ad will not compete effectively with other ads to gain visibility and interaction. Therefore, an appropriate bidding strategy impacts the performance of TikTok ads and the success of business goals. Choosing a bidding type indicates your goals and how to optimize them to TikTok.
TikTok ad bidding methods
This essentially refers to how advertising costs are calculated on TikTok. Depending on your overall strategy and TikTok advertising goals, there are several bidding options. Currently, TikTok Ads Manager offers four different bidding methods:
Cost Per Mille (CPM)
Charges per 1,000 ad impressions. Suitable for reach objectives. The formula is (Total Cost / Total Impressions) x 1,000.
Optimized Cost Per Mille (oCPM)
Charges to get 1,000 targeted impressions to likely convert. It is suitable for conversion, app installation, lead generation objectives,..
Cost Per View (CPV)
Charges when viewers watch 6 seconds of your video, the full length if shorter than 30 seconds, or interact with your video, whichever comes first. Suitable for video views objectives. The formula is Total Cost / Total Video Views.
Cost Per Click (CPC)
The bid you need to set is the amount you are willing to pay for each click and ad. It works for traffic, app installs, conversions goals. The bidding method is calculated according to the formula: Total cost / Total clicks.
TikTok ad bidding strategy
TikTok currently offers three bidding strategies: Bid Cap, Cost Cap, and Lowest Cost. Each strategy has its characteristics and application cases:
Bid Cap
Ensures the cost per result is always lower than the set bid. The system optimizes distribution based on the maximum cost per result you are willing to offer.
Advertising objectives that support bid capping include Traffic, Reach, Video Views, App Installs, and Conversions. Available bidding methods: Cost Per Click (CPC), Cost Per Thousand Clicks (CPM) and Cost Per View (CPV).
Cost Cap
With this strategy, the cost per result will fluctuate around the advertising bid. This means that the cost per result sometimes increases or decreases around the bid amount.
This bid strategy is suitable for targeting App Installs, Conversions, and Lead Generation. In terms of billing, cost-cap billing events are calculated using Optimized Cost Per Thousand (oCPM).
Lowest Cost
Unlike the other two ad bid strategies, the lowest bid strategy uses available ad group budget to provide the most results at the lowest cost without requiring a bid. No matter how fiercely competitive the auction is, the lowest cost can always be within the budget.
You should apply this strategy to get Traffic, Reach, Video Views, App Installs, Conversions, Lead Generation, and Directory Sales. The payment amount will be calculated according to CPC, CPM, CPV, oCPM.
Only campaigns with a Daily Budget support Least Cost bidding.
In case you want to control the daily cost per result, select Bid Cap or Cost Cap as your bid strategy. When your bid strategy is Bid Cap or Cost Cap, your bid must be the same as your target cost-per-acquisition (CPA).
If you run a Conversions campaign with Conversions as the optimization objective, choose the Tiktok ad bid strategy as Lowest Cost.
Tips to set up a winning TikTok ad bid strategy
After understanding TikTok ad bidding strategy, how do you set the right bid? You should follow these tips:
Start with a reasonable CPA
Based on available data from similar ad groups that have passed the learning phase, you can determine a suitable CPA. If no data is available, try creating an ad group using the Lowest Cost bid strategy and run it until you achieve at least 50 conversion events. You can then use this result as a benchmark to determine the CPA. Alternatively, use the Cost Cap strategy with a recommended bid.
Increase your budget if necessary
If your daily CPA on ads is consistently lower than the bid, the number of users you attract will not be proportional to the amount you are willing to pay. In this case, you will need to increase your budget to expand the bidding strategy to attract more target customers.
With the TikTok ad bidding strategy, advertisers can win ad auctions and create campaigns that significantly impact business operations. Your ad campaign will be more effective if combined with a good targeting strategy. In addition, we have other legal-related service support Run ads on Tiktok Shop.
Related articles:
- The secrets for selling online on TikTok effectively and exploding thousands of orders
- Common problems when Livestreaming on TikTok Shop
- Tips for choosing a niche to build a million-view TikTok channel
FAQ
For new TikTok advertisers, it is advisable to start with the Lowest Cost bid strategy. This strategy is very flexible, allowing you to switch strategies as you gather data and better understand your ad performance metrics.
If your business operates with a low-profit margin and prioritizes maximizing ROI, you should choose the Bid Cap strategy. However, be cautious when setting your bid, as a bid that is too low can result in restricted ad spending.
